Dr. Henryk Krajewski is an executive director and global capability lead for top team performance at Russell Reynolds Associates. He works with CEOs and executive teams on how to improve trust, decisions and execution.
In 21 years of practice, there’s one observation that challenges me most: why CEOs and business unit leaders are so reluctant to reduce or eliminate non-competitive aspects of their business. That statement is going to raise a lot of eyebrows. Leaders will show me all the places they are ‘cutting back’ to save money and improve margins. They’ll show me their strategic plan.
However cutting what is unnecessary is different from ruthlessly prioritizing hundreds of the remaining critical activities. A company will not – and cannot – do everything equally well.
Strategy and strategic planning activities are the typical ways companies define their focus. This seems simple and appropriate. However, there are two mistakes, each with missing elements, that are consistently made in this process – even in using the smartest tools within the biggest brands.
Mistake No. 1: Specifying goals that are too general (even ones that have specific metrics)
Too many companies specify large buckets such as profitable growth, market expansion and product innovation as ‘shared goals’ for the executive team. The illusion of specificity is granted via the detailed metrics and key results indicated for each of these areas (for example, gross margins, revenue mix or region sales growth).
While such large buckets are necessary, a top team must go down one or two levels of detail from these overarching goals. For example, the CEO must ask: What are the five key projects or initiatives that we must be 10 out of 10 effectiveness or we will have failed? Doing this allows much more focus and shared alignment on the precious few priorities that warrant the most attention and effort. It allows organizational resources to be directed to specific areas – reducing waste and raising ROI.
The reward of more focused alignment: Seeing results progress week by week, shared ownership for the result (regardless of where the responsibility sits), more organizational momentum and a high performance culture.
Mistake No. 2: Stopping at goals and activities (versus what NOT to do)
If the management team can avoid Mistake No. 1, they are still prone to Mistake No. 2: too little focus on what not to do. As Steve Jobs declared at Apple’s 1997 Worldwide Developers Conference, “You’ve got to say, no, no, no.”
In participating in this process with clients over many years, I’ve observed a lack of appreciation of Jobs’s implore of the reality that moving toward one thing has to mean moving away from something else. Indeed, the top team must define in detail what is being moved away from. And there is the catch. CEOs and management teams hate this exercise.
When advising and facilitating this conversation, this is where the day slows down. I see silent stares and sideways glances. In classic terms by strategy theory, Blue Ocean Strategy, a differentiation by subtraction approach that has inspired several winning brands, the key questions are: Where must we eliminate or reduce to enable our critical activities to succeed? Where are we not planning to compete as fully? Where can we be … average?
Why so scared? – The reason top teams make these mistakes
The honest answer – that I rarely mention out loud – is fear. Fear of taking on an ‘eliminate’ in one’s business unit and losing resources or attention. Fear of taking too big a risk. Fear of standing out and defending one’s position to a Board or shareholder. Fear of having to declare one is ‘average’ in a particular area. Fear of failure. Fear of disappointing others.
To reduce this fear, I often shift the question to, “Where can you be at least ‘market perform’ or not planning on being the absolute best?” Even then, there is trepidation.
But the reality of business, whether one admits it or not, is that the company is going to be great at certain things and average elsewhere. If the fact is there are initiatives that will land at five or six out of 10 in effectiveness, wouldn’t you rather call that out ahead of time?
Failure to specify the reality leaves the company open to greater risk – risk of surprise, misallocation of resources, overspend and distraction from higher leverage activities.
The data is also clear: companies with fewer priorities, better ‘execution muscle’ and who make clear choices, outperform their peers. Such companies are also better places to work. Less wasted time, less frustration, tension and conflict – a greater feeling of impact.
It’s time to focus more on less, and less on more. Isn’t it too risky not to?
This column is part of Globe Careers’ Leadership Lab series, where executives and experts share their views and advice about the world of work. Find all Leadership Lab stories at tgam.ca/leadershiplab and guidelines for how to contribute to the column here.